Posted by Brian Monroe - 08/31/2022
Enforcement Spotlight: With AML fine against CEO, OCC completes rare C-suite Sweep at Rabobank with prior penalties against CCO, general counsel
The country’s top regulator has completed a rare C-suite sweep of top officials at the U.S. operations of a Netherlands-based bank, doling out individual monetary penalties against a former chief compliance officer, former general counsel and, in a just-announced action, the former chief executive.
The U.S. Treasury’s Office of the Comptroller of the Currency (OCC) has issued a $20,000 fine and banking ban against John Ryan, the former Chief Executive Officer (CEO) of Roseville, Calif.-based Rabobank, N.A., for his role in helping to hide an outside consultant’s report from examiners putting the compliance program in a bad light.
The penalty against Ryan, which he neither admits nor denies as part of a negotiated settlement, is the final lingering tether yet to be nailed down related to the February 2018 enforcement action involving Rabobank, where it paid a forfeiture of nearly $370 million, with $50 million carved out to the OCC.
In the high-profile penalty, the operation, at the time part of Netherlands-based Rabobank, pled guilty to conspiracy in obstructing an anti-money laundering (AML) examination.
As well, the U.S. Department of Justice (DOJ) and OCC chastised Rabobank for failures across the entire AML program from 2009 to 2012, including risk ranking, monitoring and reporting on high-risk customers, including Mexican entities potentially tied to drug cartels.
The actions at the time – with lessons relevant for the fincrime fighters of today – reflected on broader trends in the AML space, including law enforcement wanting banks to plead guilty to a crime as a deterrent to the rest of the industry.
The penalty also illustrated the rising risks of informal and non-monetary orders later turning into massive penalties and the risk of a smaller fine turning into a head-turning penalty if examiners feel they were told lies or half-truths.
In all, the bank allowed hundreds of millions of dollars – whether wires, checks or hefty cash deposits just below reporting thresholds, structuring – to flow to and from Mexico, just as laws were changing in that country to restrict deposits of U.S. dollars.
To read the full OCC consent order against Ryan, click here.
“When Rabobank learned that substantial numbers of its customers’ transactions were indicative of international narcotics trafficking, organized crime, and money laundering activities, it chose to look the other way and to cover up deficiencies” in AML program, said Acting Assistant Attorney General John Cronan at the time.
“Worse still, Rabobank took steps to obstruct an examination by its regulator into those same deficiencies.”
The Justice Department stated the bank lied in several specific areas:
- Alerts, inquiries: That the domestic branches of Rabobank were properly processing alerts and responding to law enforcement subpoenas.
- Staffing, qualifications: That management reacted appropriately to address personnel and resource allocation issues.
- Audits, influence: That Rabobank’s internal audit was at all times independent, without other managers unduly influence the scope or outcome of the review.
- Training, results: That the bank’s AML training was properly designed and successfully met its goals.
Trying to game the system: Never lie to your examiner
Trying to keep things quiet – with firings and ‘leaving’ the scene of the crime
Failing the AML ‘mission’ at a bank – even disregarded orders can result in individual censures
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